Press Release 2 Q00 Tele Celular Sul En

Transcripts - Press Release 2 Q00 Tele Celular Sul En

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TELE CELULAR SUL PARTICIPAÇÕES S.A.
Contacts
TELE CELULAR SUL PARTICIPAÇÕES S.A.
Ruggero Caterini
Chief Financial Officer and Director of Investor Relations
Joana Dark Fonseca Serafim
Investor Relations
(5541) 312-6862
jserafim@timsul.com.br
Rafael J. Caron Bosio
Investor Relations
(5541) 312-6623
rbosio@timsul.com.br
Website
http://www.telecelularsul.com.br
TELE CELULAR SUL PARTICIPAÇÕES S.A.
ANNOUNCES ITS CONSOLIDATED RESULTS FOR
THE SECOND QUARTER OF 2000
Curitiba, August 3, 2000 – Tele Celular Sul Participações S.A. (NYSE:
TSU; BOVESPA: TCLS3 and TCLS4), the holding Company of Telepar
Celular S.A., Telesc Celular S.A. and CTMR Celular S.A., leading
providers of cellular telecommunications services in Southern Brazil,
announced today its results for the second quarter of 2000.
Highlights of the Second Quarter of 2000
Innovation
During the second quarter of 2000, Tele Celular Sul launched the two-way Short
Message Service. The Company also began offering TIMnet Banking, a system
allowing access to bank data via celular telephone.
Tele Celular Sul, together with Tele Nordeste Celular, created its own Internet portal,
TIMNET.COM, in order to provide advanced, innovative and readily accessible
services such as W-Vas (Wireless Value Added Services). In addition, CSD data
circuits are being installed, allowing the transmission of data through the digital
channel.
Market Segmentation
The segmentation strategy was enhanced with the development of new services for
corporate customers, such as the Plano Empresarial (Corporate Plan), and the Right
Planning program, which aims to encourage customer loyalty, by advising customers
as to the plan better suited to their utilization profile.
Quality of Services
In line with the Company’s Capex program, R$100 million will be invested from June
until the end of the year to broaden coverage and improve the quality of services. The
digitalization process was accelerated and reached 95% of the Radio Base Stations
(ERB) by the end of June 2000. Prices and Traffic
At the end of the second quarter, Tele Celular Sul increased its prices, raising the rates
of the Basic and Economic Service Plans. The TIM-TIM program was introduced to
increase traffic by granting rebates on rates for calls on network made by customers.
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Key Figures
In R$ thousand
2Q/00 2Q/99 1Q/00
Total Gross Revenue 221,031 205,538 252,971
Net Operating Revenue 152,950 127,133 161,279
Net Handset Sale Revenue 20,759 31,439 32,765
Total Net Revenue 173,709 158,572 194,044
EBITDA 45,451 57,571 61,059
EBITDA Margin 26% 36% 32%
EBITDA Margin without handset sales 30% 45% 38%
Depreciation 33,452 23,950 28,349
Net Profit (776) 15,139 11,842
Profit per 1,000 shares (R$) - 0.045 0.035
Market Share
The second quarter of 2000 was marked by heightened competition. Despite the
competitive environment, Tele Celular Sul maintained its leadership position in the
market, retaining an estimated 83% market share as of the end of the second quarter.
The total market penetration rate for the period is approximately 10 cell phones per 100
inhabitants.
As of June 30, 2000, the Company had 1.2 million subscribers, of which 426,400 were
prepaid service users.
Operating Revenue
The Company´s gross operating revenue for the second quarter was R$221.0 million,
compared with R$252.9 million registered in the previous quarter. The decrease quarter-
over-quarter is primarily due to seasonal effects related to vacationing during the months
of January and February as well as to the Company’s policy of blocking customers that
have delinquent accounts and the decrease in handsets sales.
Regarding the decrease in handset sales, Tele Celular Sul contracted a company
specialized in the sale and distribution of handsets as of May 2000. Therefore, this
company is now in charge of all the logistics involved in the handset sale process. Since
handset sales are not part of Tele Celular Sul’s core business, this will benefit the
Company by eliminating the handset seller credit risk.
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Composition of the Gross Operating Revenue Composition of the Gross Operating Revenue
2nd Quarter/00 - R$ 221.0 million 2 nd Quarter/99- R$ 205.5 million
Handsets Sales
Handsets sales 89,6
17,6 36,2
Others 23,5
0,5
31,4
55,7 47,8
in 76,3
47,9 Airtime
Operating Costs and Expenses
The cost of services rendered for the second quarter of 2000 (excluding the cost of
handset sales) was R$74.8 million, a 6% increase over the preceding quarter. Part of
this increase resulted from higher maintenance costs for hardware, software and
infrastructure associated with the accelerated digitalization and expansion of coverage.
Depreciation expense for the second quarter was R$30.8 million, versus R$26.5 million
in the preceding quarter.
The cost of handset sales for the second quarter was R$23.2 million, representing a
42% reduction over the first quarter of the year.
Composition of Cost of Services Rendered Composition of Costs of Services Rendered
nd
2 Quarter/00 - R$ 75.0 million 2 nd Quarter/99 - R$ 53.6 million
Payroll Third Party
services Fistel Peyroll Third Party
3,0
4,3 Services
Fistel 7,0 10,9 1,0
3,2
Depreciation and
30,9 Amortiization
Depreciation
23,9
and Amortiion 12,5 14,5
10,7 Interconnection
Leased Lines Leased 6,7 interconnecction
Lines
During the second quarter, subsidy levels decreased significantly, bringing the
subscriber acquisition cost (SAC) down to R$132, a 15% reduction over the preceding
quarter, which was R$156.
Selling expenses, excluding doubtful accounts, remained stable despite the highly
competitive environment. They amounted to R$26.6 million in the quarter, versus
R$26.7 million for the preceding quarter.
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During the initial phase of implementation of a new billing system, there was a delay in
the issuance of telephone bills and the temporary discontinuance of some practices in
order to expedite billing. Those factors increased the default level to R$22.5 million for
the period.
In addition, a significant number of non-paying customers were blocked during the
second quarter. Nonetheless, the implementation of strict credit and collection policies
has already improved July revenues, indicating lower default levels for the coming
quarters.
General and administrative expenses totaled R$12.7 million in the second quarter, or
R$1.7 million more than the first quarter, but 43% below the year-over-year levels.
Financing Expenses
Net financing expenses for the quarter totaled R$15.5 million, representing a R$1.7
million increase over the first quarter.
Tele Celular Sul's interest-bearing indebtedness was R$307.9 million on June 30, 2000,
representing 40% of shareholders' equity.
EBITDA
EBITDA for the second quarter was R$45.5 million and EBITDA margin was 26%, or
30% excluding the sale of handsets.
Net Result
A R$0.8 million net loss was recorded for the quarter and was attributed solely to the
increase in the expenses due to doubtful accounts in the period. However, the
accumulated net profit for the first half of the year was R$11.1 million, representing
R$0.03 per lot of one thousand shares.
Other Events
On June 28, 2000, Tele Celular Sul paid interest on equity for fiscal year 1999,
equivalent to R$0,0365 per lot of 1,000 common and preferred shares, net of income tax
and adjusted by the Brazilian Reference Rate applicable to the period from December
31, 1999 to the date of actual payment.
On June 30, 2000, a Special General Meeting approved the transfer of the goodwill
premium paid at the time of the privatization to Tele Celular Sul's controlled companies
Telepar Celular, Telesc Celular and CTMR Celular. The goodwill was allocated to Tele
Celular Sul through the merger with 1A2A Participações S.A. in a preceding step.
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